Summer special: immigration

Will the UK ever manage to reduce migration levels to the "tens of thousands?" Should it? And how will immigration change after the UK has left the EU? With Helen Warrell of the Financial Times, plus Owen Tudor from the Trades Union Congress and Steve Ballinger of British Future. Presented by Sebastian Payne.

Presented by Sebastian Payne. Produced by Anna Dedhar. Edited by Paolo Pascual.

Transcript

Welcome to FT Politics, the Financial Times' podcast on British politics. I'm Sebastian Payne. In the latest of our summer specials, we are breaking out of the news cycle to take a look at some of the big policy questions facing the UK.

This week, we'll be looking at the hot potato of immigration. Over the last decade, net migration has been steadily on the rise. At the same time, public unease has grown about the changing British society. Controlling migration was one of the key factors in last year's vote to leave the EU. And the country is overdue a proper conversation and some leadership about what kind of immigration policy it should have.

We're going to try and have a go at that here. I'm delighted to be joined by Helen Warrell, the FT's public policy correspondent, Owen Tudor, who is head of European Policy and International Relations at the TUC, plus Steve Ballinger from the British Future thinktank. Thank you all for joining.

So let's begin with some numbers. Net migration to the UK in the year running up to March, 2017 was 246,000. That's down 81,000 on the previous 12 months. In particular, this was due to EU citizens leaving the UK, the highest outflow in a decade, actually. So it does look like net migration is falling, but it's a long way off the conservative government's target of reducing it to tens of thousands. Those kind of levels haven't been seen since the 1990s.

With just over a year and a half until Britain leaves the EU and theoretically has full control over its borders again, what kind of policies could or should it pursue to hit that target? So Helen, let's begin with an overview of the government's immigration strategy. As I said, there's been this desire since the conservative government came to power David Cameron in 2010 to reduce net migration. We have these tens of thousands policy. Is there any way they're going to hit that?

Well, whether or not they hit that depends very much on what happens to EU migration. And that's actually the biggest unknown. In the earliest years of the Tory Lib Dem government, the absolute focus was on non-EU workers because that was the only lever that the government had to pull. And as a result, there were toughened restrictions on workers, both skilled and unskilled, coming in from outside Europe. There were restrictions on people coming to join their families from outside Europe. And there were also increasing curbs on students from overseas.

So even though immigration levels are falling now, it still looks fairly difficult for the government to meet that all-important tens of thousands target. And really, we'll be waiting to see what happens in the run up to Brexit.

And I suppose there was a definite policy change because under the labour governments of Tony Blair and Gordon Brown there were various conversations about immigration, but it was not as explicit of trying to lower it as the conservatives, and to a lesser extent, the liberal Democrats.

Absolutely not. Theresa May had a stated aim to create what she called a hostile environment for migrants in this country. And obviously, there was some more explicit versions of that, such as the immigration vans, which--

Those go home vans. Yes.

Exactly. Were driving around encouraging migrants to deport themselves. But there were also, as I've set out, a whole range of policies that became much, much tougher. And if you were an employer bringing skilled workers from outside Europe into the country became much harder-- much, much harder if you want to come and join your family. And as universities have been dismayed about for a very, very long time, it became harder for them to recruit lucrative international students.

So Owen, to you for the flip side of these consistently high levels compared to the migration of 1990s, the flip side of it has been of economic growth. And a lot of people have attributed what's happened to the British economy, the booming jobs market, to migration. And if the government pulled those extra levers it will have after Brexit to reduce migration, what kind of effect would that have on the economy?

Well, the TUC's never been particularly keen on the idea of a target for the number of migration that we get. Our view is that migration actually follows changes in the economy. It doesn't actually lead to them. And I think that what we've been seeing with the latest figures is actually a reflection on the state of the British economy, but it's not actually what will happen to it.

We think there will be increasing skill shortages as a result of large numbers of people leaving the United Kingdom. But what we're particularly concerned about is the things it tells us about the state of the British economy. In particular, you've got stagnant or falling wages, whereas in other parts of the European Union wages are going up. You've got the fall in the value of sterling, which firstly, is one of the reasons why the wage levels are in real terms going down at the moment.

But also makes it much more difficult to justify travelling across Europe to get money to send it home, and then find that it isn't actually producing as much in zloties as it did five or six years ago. So we actually think it's more of a reflection of the state of the British economy. A bit of concerns about some of the increasingly tough climate that migrants feel they're facing. Increasing concerns about what investment is going into the British economy. But mostly just about wage levels.

And I guess one of the things that's often hasn't been looked at is the difference between high-skilled migration and low-skilled migration because a very different effect on the economy. Because I think you'd find very few British people who would compare a high-skilled migration is a lot more angst about low-skilled migration, the effects that has on wages and what have you.

There is some indication that low-skilled migration-- I mean, this is a bit of a misnomer by the way. Quite often what we call low-skilled migration is relatively skilled people filling jobs that don't require qualifications, which is a slightly different matter. But what we do find is that there is some impact on wages at the lower end of the labour market as a result of migration.

Or more to the point, the result of what employers are doing by using migration. We are concerned that there are some employers-- this quite often doesn't apply to those employing highly skilled workers who have to treat them fairly well-- we're worried that some employers are using migration as an alternative to training. And others are using migration as a way of depressing wages in the way that employers quite often use any increase in the labour supply.

So Steve Ballinger, let's just talk about the last thing on this tens of thousands. And the reason I keep coming back to that is because it really has been the thing most people think about in the British immigration debate. And it was in two conservative manifestos, one of which won with a slight majority, one didn't, but came pretty close to it as well.

And in fact, it was a policy that I believe was created by accident-- that it was a spokesman for the-- when the conservatives were in opposition, who put this forward as [INAUDIBLE] the tens of thousands. And that was then taken and run with. And nobody's really been able to come back from that. Do you think that's a good policy to have?

It's been a very difficult policy for the conservative governments, hasn't it, because basically, they've sort of created a stick with which they beat themselves over the head every quarter when new net migration statistics come out, particularly when they just went up and up and up and up, I think, 30 quarters without hitting the target. So it's been a huge problem. And of course, it has created this sense of crisis.

It's kept the focus on numbers as well. But also, maybe talking about what you were saying before and what Owen was saying, it lumps all immigration together as one big number rather than disaggregating it into lower skilled, higher skilled, students, et cetera, where actually, if you look at public attitudes, people have got very different attitudes to, say, international students and high-skilled migration than they have to lower skilled migration. So that has caused quite a big problem for the government. And Brexit is an opportunity to change that. It is a reset moment for the immigration debate and for immigration policy.

We'll come back to that in a moment. But Helen, on this point, because this was obviously picked up and driven by Theresa May when she was home secretary-- and I think it's worth noting that within Whitehall and Westminster, the home office has the reputation of sort of the football club Millwall, which is that nobody likes us and we don't care.

And they've always been the tough department that tries to clamp down on these things and often has many problems of incompetence over visas and border controls. And there's all sorts of stories for many years about problems within the home office.

But it's quite unique to have a home secretary who then becomes a prime minister had continued that attitude. So certainly while Mrs. May's in Downing Street, you can't really see anything but a continuation of their tough line, which is just bring the numbers down regardless.

Absolutely. And I think one of the things that we hear over and over again with Mrs. May is that when she has come to a certain policy decision, she absolutely will not change her mind on that, even if the evidence changes. And as George Osborne has pointed out from his position now editing the Evening Standard, during the Cameron government, she was relatively isolated in cabinet in pursuing these extremely tough immigration policies.

And now she's prime minister she's going to absolutely continue to bang that drum as loudly as she can even though many other of her cabinet colleagues-- people like Boris Johnson, Liam Fox-- have suggested that, for instance, students should be taken out of the net migration target. She's absolutely refused to do that.

So if that's where the Tories are-- and what about Labour, because it's quite hard to look at the Labour Party and actually know what their policy is because particularly over the future free movement of people, which is one of the big things about what Brexit's going to look like? And the party seems to be split because there's Diane Abbott, who's the shadow home secretary. She's very pro-migration and doesn't want to have any kind of cap.

Then you've got another side represented by many Labour MPs who are outside of London in the north and what have you. And they want to have a much more fixed-- more like the sort of thing Mrs. May has.

There's a contradiction and a battle to be had there. And one would assume that Jeremy Corbyn would probably fall on the side of Diane Abbott and the pro-migration side of things. He's always been pro-migration for quite a long time.

The t, obviously, isn't affiliated--

Of course. Yes. No. No.

--with the Labour Party. So we're not responsible for its position. But I think one of the common features that Labour came out with during the general election, for instance, which applies both to Brexit generally and also to migration, is about controlling what goes on in workplaces because we think that one of the main reasons why people are genuinely concerned about levels of immigration-- and we certainly wouldn't say that it's racist to be concerned about levels of immigration-- one of the things that people are particularly worried about is what happens in the labour market as a result of large numbers of migrants.

And as I said before, employers have used influxes into the labour market before in this way. It was done when women came into the labour market in substantial numbers. They tried to pay them less to get away with different forms of employment so that they weren't able to get the benefits that trade unions had negotiated for their members.

So people are worried about that. And the Labour Party, I think, is right to say one of the things you need to do if you're going to have free movement and large numbers of people coming into the labour market is control the labour market more. I think that's been the lesson of why there has been less concern about these issues in other parts of continental Europe-- in northern Europe, for instance.

On training, for instance, we have a sort of middle way, not a very comfortable one. In northern Europe, they train a lot of people and take a lot of migrants. In southern Europe, they don't train a lot of people and don't take a lot of migrants.

We live in the uncomfortable world of not training many people and having lots of migrants. And that causes problems in the labour market, but so does the general deregulation of the labour market-- zero hours contracts, temporary agency workers, the way we've implemented the Posted Workers Directive, and so on. Those things need to change if we're going to get people to be less concerned about the impact of migration on generally low-paid sectors of the economy.

Well, that brings us nicely onto the next point, which is the moment of Brexit. And I guess, Helen, that at this juncture, the government is going to have to talk about these things that Owen raises-- doing things to improve the skills of British workers-- because if the trends we've seen in the last couple of quarters for net migration continue, then there will be some kind of skills gap, particularly in some acute areas-- agriculture work, NHS. What have we seen or heard from the government about they're going to prepare for that potential shortfall?

Government has enforced several times that business needs to be much better at training workers. And instead of having a knee-jerk reaction that when they need somebody, they hire a migrant. Employees in this country are clear. And I think the message has now got through that skills is a very important issue.

But I think one of the very interesting things about Brexit is that there's been a realisation that while we've always in the past focused on talking about high-skilled migrants, we need low-skilled migrants, as well, because actually, whether or not we like it, there are lots and lots of jobs in this country that British people don't want to do.

We're also faced with the problem that unemployment is at its lowest level for over 40 years. So even if every Brit who possibly could be bought out of the shadows and trained, there wouldn't necessarily be enough people to fill the gaps that we have.

The enormous unknown we have at the moment is how the new immigration policy for EU people is going to work post-Brexit. And I think there were some indications there will probably be a work permit system. And I think it's probably safe to assume that high-skilled EU migrants will always be welcome here. The main question is how do we deal with bringing people in at this bottom, lower skilled end?

I think there is an opportunity there, isn't there, really, that Brexit does present an opportunity. We're going to have to have big changes to the immigration system. You can see that as an opportunity to find a system that does still work for business, but also where you secure public consent as well.

And that's been a big problem in this country. It's why immigration has been up there with the sort of economy and the NHS as the three issues people most care about for such a long time, fuelled by net migration statistics that sort of present this crisis narrative every three months.

Public don't trust the government to manage the system. And they don't trust the system. I think we have got an opportunity now maybe to change the immigration system to something that people do have a bit more confidence in.

And one way of doing that would be by disaggregating those figures, differentiating between different types of migration, maybe keeping skilled free movement from the EU but exerting more UK control over low-skilled immigration by, say, negotiating with business and with trade unions a cap or a quota every year so that you've got a degree of control so you ansered that referendum demand for greater control, but focus on the area of immigration that people care most about.

They've got no desire to restrict the number of skilled migrants-- number of doctors, the number of engineers coming in. But putting some restrictions on low-skilled might help build public confidence in the system, but also still work for business. And I think business ought to be one of the voices that's advocating for that because it's in their interests as well.

What we'd be concerned about, though, in terms of what we know about what the government has said about migration systems-- for instance, saying that there will not be a requirement for a visa to come to the UK only to work in the UK-- is that you end up with large numbers of people coming into the country who may then decide to enter the labour market or may be encouraged into the labour market by unscrupulous employers who are still trying to take those people on without paying them the rate for the job, without treating them properly, and without paying things like tax and national insurance.

Now, in a deregulated labour market such as we've got at the moment, there's very little to stop that. You've got very low levels of enforcement by the government, very few resources put into that. And you then get a downward pressure on the good employers who do want to play by the rules, who do want to have the right systems in place to deal with migrants.

And you get an even bigger grey economy, with people working when they're not supposed to on very low wages, very insecure situations, put up in very overcrowded housing, and so on, which just makes popular opinion about migration even more toxic, even more concerned, and rightly so. So if you're going to have a system which allows people to enter the country freely for holidays or to study or something like that but you don't control the labour market properly, you're stirring up yet more problems, far worse than we've had already.

So the government is trying to do something about this. They've launched a review into immigration. Helen, this is Amber Rudd, the home secretary-- has pushed this out there. But quite strangely, it's not going to report back until almost a year's time, just six months before the day that we leave the EU, which is going to be very tight.

And we have to assume from that that on Brexit day, things are going to continue pretty much as they are. And the noises we've heard from the government this summer suggest that any transition arrangements on [INAUDIBLE] people will probably not change that much because we're not going to have the systems in place. And we simply don't know what we want. What kind of things do you think could come out of the Rudd review?

You raise the point that it's taken a very long time to commission this, the review of the Migration Advisory Commission into EU migration. I actually think this is worth mentioning because there's actually no reason why the MAC couldn't have been asked to do this the day after the referendum result came because this is an absolutely enormous piece of work. It's going to take around a year.

And it would be much better that they had been reporting this summer than that we'll get the results of whatever they say next summer when, in many ways, I think, the information they find in the analysis that they put forward is actually going to be coming into the national debate and into the negotiations very, very late.

What we understand from what the home office has said is that the review is going to look into what sort of sectors EU migrants work in, what the impact of EU migration being capped or reduced might have on different sectors of the economy. And I think this is actually a question that would have really had-- if we had proper answers to this, I think this could have also helped to inform a much more intelligent debate even before the referendum.

There is a slight issue, though, Stephen, with the public debate, which is this-- if the government tries to do anything that moves it away from the numbers, you've got populist people like UKIP on the far right who would just come out. And part of the reason we ended up in this conversation is that people like you get pushed in that direction. And as the concern rose of public rankings, they got a louder and louder voice and more air time on TV. And some people seem to like, at least, what they were saying.

So even when this comes out, there still needs to be a big chunk of leadership to say actually what UKIP and the populists say about just killing the numbers is not what's right. And I do wonder, given how sort of weak and feeble our political system is at the moment, if anyone's got the capacity to do that.

Only, of course, UKIP's voice is going to be significantly quieter now after a sort of electoral wipe-out, particularly when they're going to have no MEPs once we leave the European Union. They will be a very muted voice, I think.

But you're quite right. There is a risk. If we don't do something, then that does give a bit more fuel to the populists. I do think if you answer people's concerns and engage with public concerns, then actually, you cut off some of the supply of energy to the populists because you're answering people's concerns. And one of the ways you could do that is actually by engaging the public a bit more in the debate we have about immigration.

British Future's running a-- something called the National Conversation on Immigration together with Hope Not Hate. And we're going all around the country, talking to people about immigration and feeding their views into the--

What kind of things do you find from that when you've spoken to people? Is it the stereotypical views or is it more nuanced?

It's much more nuanced than you would think. It's localised, for starters. You've got very different views in different parts of the country, sometimes parts of the country that are very near to each other. We went to Cambridge. And then we went to the town of March 20 miles up the road in the Fens-- very, very different views on immigration.

But you've got some common themes. Integration is a massive part of it. And fixing integration and making sure integration works would play a very big part in easing people's concerns as well. But also, this idea that people have got different views about different types of migration, I think, is really important-- keeps coming out of these conversations.

But we could engage the public a bit more in our immigration debate and in some of that decision-making. And I think that might cut off some of the supply of energy to the populists.

One of the problems that we found throughout, as Steve mentioned earlier, is there is a general concern among people that the system is out of control and that governments cannot do anything about it.

Hence take back control.

Indeed, but which also, as Steve also said, was simply ramped up by having a migration target which kept being missed and kept reinforcing the suggestion that there was nothing you could do to control things. That's one of the reasons why we've said not just control of the labour market, but also putting more effort into raising spending on social goods, the things that are currently stretched, and where you can see competition for housing, for health care, for school places, and so on-- we've got to restore the idea that governments can actually control this in the interests of the people.

But moreover, we've advocated the idea of a much bigger migration impacts fund than the government has put forward, and also said that one of the critical things about that migration impact fund is it's got to be locally controlled. If we did give people more control over how that extra money is spent, how the benefits of migration are allocated and distributed, then you would actually get far more confidence in the way that the immigration system operates.

We know from the polling that we've done and from the talks that we have with conveners in big factories and trade unionists around the country-- we know that what people are interested in is the contribution that migrants make to the economy. And sometimes, that seems a little bit like you're asking people, well, you've got to do something to get the right to be here. But that issue of contribution, I think, goes to the heart of people's concerns about migration.

If I could just make a point about control, as both of you have mentioned, the migration target has actually not been particularly helpful in this national debate about whether or not immigration is under control. And one of the huge ironies that has come out this week is that for several years, the government has been overestimating the number of foreign students who were overstaying illegally in the UK. And actually, the number, which had been thought to be around 100,000, is much, much closer to 5,000.

Now, what I think is interesting about this is that the idea that the 100,000 people who were here who had come in who we couldn't get rid of-- that gives an illusion that we're not under control, that our visa system cannot cope, that it's not being administered properly. Actually, the fact that this figure was wrong meant the government wasn't maybe even getting enough credit for the control it did have over the system.

And this is one thing British Future has done. You did a pamphlet, Steve, if I remember, called "How to Not Talk About Europe." And it looked at what people think about migration and what the actual reality is. And the distance between those, which is Helen's point on the students staying issue, is sometimes huge. So the education does seem to be a big aspect of this.

And also, just listening to what people think on students, for example, we put out some polling yesterday. 3/4 of the public want the number of international students in the UK to either stay the same or go up. So there's absolutely no public appetite for a crackdown.

And we did a whole series of focus groups on this a couple of years ago as well. People were flabbergasted that students were counted as immigrants. They were like, what? They really couldn't get their heads around it.

They felt that students make a contribution to the local economy. They felt that they made the universities better. People were often very proud of their local university, particularly if it's seen as one that's doing very well.

The fact that people come from all over the world to attend their local university was a bit of a source of local pride. So there was certainly no sense of, we're really worried about the students. But again, the net migration target creates this perverse incentive to keep those numbers down because it's part of that big number.

The students, Helen, have been a real big part of the debate on this because there's this whole argument within the cabinet, actually, about whether students should be counted as migrants or not. And I think you've done analysis pieces making the case both ways, whether they should or they shouldn't be included.

But that seems to come to the heart of it because here are some people who come. They make a very good contribution. They're paying university fees to the UK. They tend to use fewer resources from the state. So you would say, well, actually, that's great migration.

If you look at the growth of the UK's university sector over the past two decades, it's been huge and brought benefits to many parts of the country that have suffered from deindustrialisation. And yet because of that target, because of this overwhelming sense of getting control, they've been crushed down as well. And to some people, it looks a bit baffling why we're trying to bring down what seems to be a very good thing.

Well, it's a very good thing economically. It's very good for the UK's reputation. And I think one of the things that is most frustrating to the diplomatic community is the soft power benefits of educating many, many people from overseas at British universities. And one of the things that's been very concerning post-2010 is the decline in the number of Indian students coming to study in the UK.

The UK has a very, very strong and long history of educating Indian prime ministers, heads of state. And this is exactly the kind of thing that's going to be eroded if we build up the barriers rather than pulling them down.

Owen, I wanted to go back something you said right at the beginning about this because you mentioned that it's not racist to want to reduce migration. And I think part of the reason we've ended up in this position is there was a general attitude, let's say, for a while in the UK that if you wanted to reduce migration, you got put in that box of populists like UKIP, who just want to bring them down and really cut down on migration.

That seems to have changed now in some ways. Brexit was the safety valve for that, in a way. This has been building up and building up. And the anger-- it's not reached levels that we've seen in places like the US, for example. But it has been there. Do you think we're far enough along that road to have the national conversation of the kind Steve's having in private with voters?

Just to clarify, I said that it wasn't racist to be concerned about the effect of immigration.

Sure.

I think one of the interesting things is that you asked, Steve, why talk about Europe. Actually, one of the issues in the Brexit referendum was obviously at a policy-level concern that there was lack of control over migration and so on.

If you look at LSE polling data that came out about a month ago, for instance, it actually said that people's concerns in the UK were more about immigration from outside the EU than from inside the EU. But one of the concerns was that that was uncontrolled.

Now, there are, in fact, large numbers of policy levers you can pull that would exercise control over intra-EU migration. They're not all ones that we would advocate, some of them like controlling whether you have public sector jobs filled by people from other countries. If you look at the health service, clearly, we couldn't cope with restricting health service jobs to British citizens. We need people from other countries to fill those jobs.

But there are lots of policy levers used by other countries around the EU world to control migration or to control free movement. Now, we think that those ought to be part of the debate about what you do within the single market and the customs union rather than saying that free movement around the EU is one of the reasons for leaving either of those institutions.

And finally, Steve, do you think that voters who raised these social integration concerns, it was the economic ones of jobs going outside, changing communities, changing face of Britain, all the rest of it-- do you think those concerns can ever be solved by policy things or is this just simply fact that this is the way the world is now and people have to accept it?

I think there are ways of ameliorating some of those concerns-- using the controlling immigration fund better, making sure people actually know about it. Nobody knows what it is. Ministers should be talking about it.

But you really need to sell the benefits of it at a local level and actually say, the reason why we're getting this new doctor surgery is because we've had a larger amount of immigration and we've got some money to cope with it. People just aren't making that case at all.

I think employees could do a bit more, actually, on this as well-- that if you've got a new employer comes to a region that hasn't had a lot of immigration and suddenly they get quite a rapid pace of change as a result, the employer could play more of a role in where are those people housed? How do we ensure that people get along?

See, I think you can do things to address people's concerns at a local level. I think showing people facts and figures and graphs of sort of the impact on GDP isn't the way of doing it at all. Showing people that they've got a new doctor surgery might be.

And finally, to wrap this up, I'm going to ask you all to pretend that for one day, you're sitting in the home office. You are Amber Rudd. And you're able to do one thing to change immigration in Britain. And I'm going to ask what it would be. Owen?

I'd phone the Secretary of State, Greg Clark, at BEIS and say, you need to do something to control the labour market to make sure that people feel exploitation and under-cutting has been ruled out in this economy.

Steve?

I'd use the Brexit moment to change the immigration system so you've got different policies toward different flows of immigration and engage the public in a debate about how you do it.

And finally, Helen?

I would axe the net migration target. And in particular, I would stop using the IPS survey as a measure of net migration to this country.

There you go-- all solved, plenty of solutions there. That's it for this week's episode of FT Politics. Thank you very much to Owen, Steve, and Helen for joining us. We're back next week for our last policy instalment before we go back to regular politics. Until then, thanks for listening.